At a Glance

The debt snowball method can help you gain payoff momentum and confidence as you eliminate your debts one by one. You’ll start by paying your smallest debt off first (while still paying minimums on your other debts), the next smallest debt off second, and so on. You can picture each amount paid off as a snowball gaining more and more momentum down a slope.
The snowball calculator can help you create a roadmap to achieve debt-free freedom.

Estimate your savings with this debt snowball calculator

How Many Debt Accounts Do You Have?

Include credit cards and all loans except mortgage. Snowball method is applicable if you have at least two of these.

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Keep your credit and loan statements handy to fill in balance, payment and rate details.

What Is the Debt Snowball Method?

The debt snowball method is a strategy to reduce debt. It focuses on paying off debts in order of smallest to largest. The name comes from the idea that you gain momentum (like a snowball) as you knock your debts off one at a time. You’ll focus on paying off your smallest debt first while continuing to make minimum payments on your other balances.

Once the smallest balance is paid off, you’ll take the money you were allocating to that debt and put it toward the next smallest balance. The cycle repeats until all debt is paid in full.

5 Steps of The Debt Snowball Method


Debt Snowball Example

Here is an example of how the debt snowball method would be put to practice. Let’s say you have a total debt of $48,200, broken down as follows:

  • Auto loan: $20,000, 5% APR, $400 minimum monthly payment
  • Credit card: $6,200, 18%, $185
  • Personal loan: $12,000, 19%, $220
  • Student loan: $10,000, 7%, $100

You would start focusing on paying off the lowest balance first, so putting as much toward the credit card balance of $6,200 as possible, while paying minimums on your other debts. Then the cycle would continue with the student loan balance, personal loan balance, and finally, the auto loan balance.

Let’s say you are able to put an extra $300/month toward debt repayment. You would be debt-free in 50 months and pay a total of $11,564.24 in interest.

Debt Snowball Method Alternatives

Alternatives to the debt snowball method and debt snowball calculator include:

  • Debt avalanche method and calculator: The debt avalanche method focuses on making payments on the debt with the highest interest-rate first, followed by the debt with the second highest interest-rate, etc. See below for more information on the debt avalanche method.
  • Debt consolidation: With debt consolidation, you take out a loan for the total amount of debt you’d like to pay. You’re essentially borrowing money to pay off all of your existing loans, and then focusing on repaying a new loan. It simplifies payments since you only have one balance and one interest rate to worry about each month.
  • Debt management plan: In a debt management plan, a non-profit agency that specializes in credit counseling can help you create a repayment plan with a lower interest rate.

Debt Snowball Vs. Debt Avalanche

The debt avalanche method is a different debt payment strategy. Like the debt snowball method, you’ll make the minimum payments on all of your debts. Unlike the snowball method, you’ll focus on first paying off the debt with the largest interest-rate, rather than the smallest debt.

Because the debt avalanche method works to eliminate debts in order of highest to lowest interest-rate, it can save you money in the long run. So while the debt avalanche method may not be as motivating as the debt snowball method, you might save more money.

Ultimately, the best debt payment strategy is the one you’ll stick with. Pick the repayment strategy that you think you’ll be most likely to follow and discover when you’ll pay off your debt once and for all.

Debt Snowball Best Practices

Here are a few best practices to keep in mind as you begin the method:

  • Find a side hustle. Try making extra money any way you can, whether that be hosting a garage sale or taking on a side job.
  • Don’t take on any new debts, as this will only set you back farther in your goal.
  • See what expenses you can cut back on, such as making coffee at home instead of buying it out.

Debt Snowball Pros

The main advantage of the debt snowball method is that it is very encouraging. You’ll feel confident as you knock out your debt, which can keep you motivated to stick with the plan. You only have to focus on one debt at a time, instead of feeling overwhelmed by your total debt as a whole.

Debt Snowball Cons

The main disadvantage of the method is that there’s a chance you’ll pay more on interest than if you used a different type of debt elimination strategy. By focusing on the smallest amount of debt rather than the debt with the highest interest rate, you’ll still be stuck paying off that interest, which will only increase with time.

If you’re concerned about the amount of interest you’re paying, take some time to make a list of your APRs and interest rates. If they seem very high, consider another method, such as the avalanche method, which focuses on paying down your balance with the highest interest rate first.

How to Stay Out of Debt

Once you’ve paid off your debt, here are a few strategies to help you stay out of debt for good:

Request Alerts from Your Credit Card Company

Spending alerts can tell you when charges are made to your account, keeping you informed, accountable, and less likely to overspend in the future.

Pay with Cash and Debit

Making purchases with cash or debit keeps you more aware of how much money is coming out of your account. Credit cards can cause you to spend more than you would otherwise, sometimes money you don’t really have.

Create A Budget

Budgeting helps prioritize your necessary expenses and avoid unnecessary purchases that could land you in debt. Keep track of income and expenses, live within your means, and stay debt-free.

Frequently Asked Questions

Does the Debt Snowball Method Really Work?

Yes, the debt snowball method really works. But unlike debt relief options like debt consolidation loans or debt management plans, you may wind up paying more over a longer period of time. But the motivational concept helps consumers stay motivated to pay off debt.

Is the Debt Snowball Method Right for Me?

If you’re the kind of person who likes to-do lists—and especially enjoys crossing things off said to-do lists—the debt snowball method can be a solid, rewarding approach. If you’re more in the mindset of dollars and cents, you may want to consider the debt avalanche approach. Either way, you may want to use our debt payoff calculator to evaluate all of your options.

How Do I Decide How Much Extra to Put Toward Monthly Payments?

You should put as much as you are able to afford toward your monthly payments, but ideally at least the minimum. Review your budget and see how much you can realistically put toward your debt. Paying more than the minimum, even if just barely, will help you lower your balance, save on interest, and pay off your debt more quickly.